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World Bank profits from poor nations

When people think of the World Bank, the image they often see in their minds is one of a global financial institution that provides loans to developing nations to raise their standard of living. That is basically the picture that the Bank’s PR people would like you to see.

The reality is quite different. The World Bank actually profits from poorer countries in terms of net cashflow going into the Bank.

When Inter Press Service asked me to cover the proceedings of the meetings of the Boards of Governors of the World Bank and the International Monetary Fund in Singapore late last year, I jumped at the chance. It was a rare opportunity to enter the “lions’ den”, so to speak, and see first-hand how the movers and shakers of the global financial architecture operate.

What struck me most was the air of Big Brother all around the impressive Suntec convention centre in Singapore. Battened down under a heavy security cordon, the convention centre had plasma TV sets beaming news from BBC, CNN etc – all flashing the same corporate-friendly messages in benevolent sweet-sounding language. The titans of Big Business – the transnational corporations – are indeed the new rulers of the universe.

At the convention centre, men and women in immaculate suits, led by Paul Wolfowitz, the Bank’s president (the same guy who pushed for more aggression against Iraq), spoke soothing words of “poverty eradication” and “good governance”. But there was one thing missing – the poor people, those people the Bank purports to help, were nowhere to be seen, their views unsolicited.

This was the article I came up with:

SINGAPORE, Sep 19 (IPS) – The World Bank receives more from developing countries than what it disburses to them says a new report released Tuesday as finance ministers endorsed a controversial new Bank plan to tackle corruption in developing countries.

The Social Watch Report 2006, released here at the annual meetings of the Bank group and the International Monetary Fund (IMF), stressed the need to reform the current international financial structure. Net transfers (disbursements minus repayments minus interest payments) to developing countries from the Bank and the International Bank for Reconstruction (IBRD), have been negative every year since 1991, the report pointed out.

The IBRD is now not making any contribution to development finance other than providing funds to service its outstanding claims. The International Development Association (IDA), which provides interest-free credits and grants to the poorest developing countries to boost their economic growth, is the only source of net financing from the Bank. Full article

Buying ‘goodwill’ – RM4 billion worth of it

When are petroleum royalties not petroleum royalties? When they are deemed to be “goodwill funds”, of course.

If you suffer from insomnia, then wading through the Malaysian Auditor General’s report may be just the thing for you. But then again, what you find in there might give you even more sleepless nights. Just reading through one chapter of the report “inspired” me to write the following article for Aliran Monthly about the lack of accountability and transparency surrounding the Treasury’s management of royalties collected from oil extracted in states such as Terengganu. We are not talking peanuts here but big money….

Basically, the Treasury is supposed to make allocations out of the Fund to various ministries (and via these ministries to federal agencies), financial institutions, and federal and state-level offices.

According to the Auditor General’s Report 2005, in line with a directive, the Treasury was supposed to create an Accounts Committee, chaired by the Treasury’s Chief Secretary, to administer the Fund. The Committee was supposed to comprise representatives from the Prime Minister’s Department (including the Economic Planning Unit), the Treasury, and the Finance Ministry.

But the Auditor General (AG) said such a Committee had not been set up – surely a serious concern.

Instead, a “Central-level Committee”, which appears less high-powered, was formed. This Committee, which includes representatives from ministries and implementation agencies, meets twice a year to discuss and approve allocations. It is not clear who exactly is in this Committee. Full article

Malaysia-US FTA negotiations hit turbulence

It looks like the FTA negotiations between the United States and Malaysia – now in a crucial phase – are not going to be easy to conclude. For one thing, there is the whole issue of government procurement and how an FTA would affect the NEP policy of affirmative action. More crucially, an FTA would take away economic sovereignty from Malaysia, allowing Big Business from the United States to gain power and influence over the Malaysia government. Not good.

It would also lead to a quickening in the pace of the neo-liberalisation of the Malaysian economy, thus aggravating the already huge divide between the rich and the poor in the country.

Because I was concerned about the impact an FTA would have on Malaysia, I wrote this piece for Aliran Monthly:

The problem is while the Americans are going around and putting their “spin” on how Malaysia stands to “benefit” from this FTA (as if the US is doing us a big favour, when we know they are eyeing our financial services sector and government procurement), the Malaysian government has been largely silent. There has been no popular input or consultation with say, the rice farmers in Kedah, who are really worried about agriculture imports. Neither has there been much media coverage, public consultation or parliamentary scrutiny of the impact the FTA is likely to have on Malaysia.

When an American speaker from a US think-tank was asked by a Malaysian activist about the lack of transparency in the FTA negotiations, he retorted, “You are asking the wrong person. You should ask your own government.”

So let’s ask again, where is the transparency? Full article

Banks against the wall

Things can go drastically wrong when banks are poorly regulated – as we saw during the 1998-98 Asian economic crisis. The problem is further compounded when political connections come into the picture. During the 1990s, I personally saw how banks were falling over themselves to lend to certain politically well connected firms, sometimes merely on the basis of a “Letter of Comfort” from a profitable holding company.

And when the day of reckoning comes, as it did in 1997-98, it is the government (read, the taxpayer) that has to step in to bail out loan-saddled banks to the tune of billions of ringgit. To this day, Malaysians still do not know for sure who the culprits were.

I wrote this piece for the New Internationalist magazine, highlighting some of the problems that plagued our banking system back then. Will we ever learn?

Banks against the wall

Dipping deep into public funds, Anil Netto finds the Malaysian Government bailing out banks… and their well-connected debtors.

When I was a child, my father used to pick me up after school and drive me home. Sometimes he would stop by at the local branch of the United Malayan Banking Corporation (UMBC), where he had an account. I would wait in the car while he applied for a bank draft or arranged to make some other payment. Those were the days before computers when a simple transaction could take what seemed like an eternity for a child waiting outside in the car.

Today, as I pass by that same street, the bank – once Malaysia’s third largest – has vanished, as if some alien spacecraft had zapped it. It is now a supermarket. Its disappearance is a classic example of how government bails out banks while the well-heeled and well-connected escape responsibility. Full article

Latin America has tips for Asean Charter

I wrote this article for IPS because I was concerned that Asean was heading down the neo-liberal path. I felt there were many lessons that the people of Asean could learn from South America, where many countries have rejected neo-liberalism after the devastating impact it has had over there. Moreover, the Asean Charter is being drafted even though many in civil society have not been thoroughly consulted.

PENANG, Malaysia, Jan 24 (IPS) – Over the last two months, South America and South-East Asia have taken huge steps forward towards creating two distinct regional blocs. But the contrasting principles in their respective blueprints for integration reflect the different political and economic philosophies driving the integration plans.

Earlier this month, leaders of the Association of South East Asian Nations (ASEAN) met in Cebu in the Philippines and approved a blueprint for a charter, which will lay the foundation for a new ASEAN Community by 2015. ASEAN groups Singapore, Malaysia, Thailand, Burma, Laos, Cambodia, Vietnam, Brunei, the Philippines and Indonesia.

The guiding principles in the ASEAN blueprint reveal a markedly different emphasis compared to the underlying tenets in the Cochabamba Declaration, signed in Bolivia last month, paving the way towards a South American Community of Nations. Full article

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